In a resilient display of market strength, US stocks advanced on Thursday morning, defying concerns raised by a freshly released December inflation report that surpassed economists’ expectations. This unexpected surge in inflation has triggered renewed speculation about the Federal Reserve’s approach to interest rates.
The S&P 500 (^GSPC) posted a gain of approximately 0.2%, building on the momentum from Wednesday when the benchmark achieved its highest closing since January 2022, narrowly missing the opportunity to establish a new record. Similarly, the Dow Jones Industrial Average (^DJI) experienced a modest uptick of 0.1%, while the Nasdaq, renowned for its tech-heavy composition, led the charge with a 0.3% increase.
This week has witnessed a struggle in stocks as investors eagerly awaited the release of the U.S. consumer inflation report for December. The outcome of this crucial report revealed a slightly more significant uptick than anticipated, with prices rising by 0.3% on a monthly basis and registering a 3.4% increase year-over-year. Examining the “core” data, which excludes the volatile food and energy sectors, inflation accelerated by 3.9% over the past year.
For traders closely monitoring the likelihood of a “soft landing”—a scenario where inflation retreats to 2% without triggering an economic downturn—this inflation report held particular significance. Investors had been adjusting their expectations based on the last Consumer Price Index (CPI) report, making this recent development a critical point of consideration.
Simultaneously, the cryptocurrency market experienced a boost following the Securities and Exchange Commission’s (SEC) regulatory approval for U.S. spot Bitcoin exchange-traded funds (ETFs) to commence trading on Thursday. This move was perceived as a game-changer for the sector, prompting premarket increases in the shares of leading players like Coinbase (COIN) and Marathon Digital (MARA).
Bitcoin (BTC-USD) responded to this positive momentum by surging above $47,000, reaching its highest levels since March 2022. Ether (ETH-USD), Bitcoin’s rival, also witnessed an uptick amid expectations that it might be the next cryptocurrency to receive approval for an ETF.
Looking ahead to the financial landscape, Citigroup (C) announced that it would incorporate over $3 billion in one-time reserves and expenses in its forthcoming quarterly financial update scheduled for Friday. The fourth-quarter earnings season is of paramount importance for stocks, given their lackluster performance in the current year.
In summary, despite concerns arising from unexpected inflation data, the U.S. stock market exhibited resilience and posted gains on Thursday morning. The positive performance was not limited to traditional stocks, as the cryptocurrency market experienced a boost following regulatory approval for Bitcoin ETFs. As investors await crucial financial updates and earnings reports, the market continues to navigate uncertainties surrounding inflation and economic trends.
Source: Yahoo Finance
